Fletcher in the News

Is the Infomercial Dead? Prof. Bhide Weighs In

Date: May 5, 2014

Depending on who you ask, the infomercial industry could be worth anything from $200 billion, to $250 billion, or even $300 billion. Whatever the number, that’s pretty big. And as Jon Nathanson (now Slate columnist) pointed out in his exhaustive breakdown of the economics of infomercials on Priceonomics, in comparison, the U.S. network and cable industry was estimated at just $97 billion in 2013. So why isn’t Thom Jensen, the founder of the Perfect Bacon Bowl (which has shipped 2 million units since late 2013), getting the kind of adulatory coverage bestowed on Instagram, an app that was basically profitless when Facebook purchased it?...

… To start with, infomercial is too limited a term. The industry catchall is “direct response television” or DRTV—the kind of late-night or midday advertising that compels you to purchase a Snuggie from the number on the screen. It includes live TV home shopping (which Timothy Hawthorne, founder of the DRTV agency Hawthorne Direct, estimates to be worth $20 billion to $30 billion); traditional infomercials (which he puts at sales of $20 billion to $25 billion); and a more recent development, brand response DRTV (more of an unknown, according to industry experts I spoke with, but potentially tens of billions). It’s difficult to find firm numbers—many of the estimates are offered by those who have a stake in the industry. But turn on the TV at 1 p.m. or 1 a.m., and you’ll see major brands like Priceline taking over the cheap time slots where Tony Robbins used to tell you how to “Unleash the Power.”…

…It’s hard not to scoff at some of the products you see pitched in infomercials—but the format deserves a little respect. In their heyday, infomercials were certainly an innovative, scrappy way of bringing a product to market. “It’s part of a recurring pattern—when you develop any new means of communicating with consumers, the people quickest off the block tend to be smaller entrepreneurs. In part because they’re more nimble, in part because other avenues are closed to them,” Amar Bhidé, a professor at [The Fletcher School,] Tufts University who has studied entrepreneurship, told me. The downside: Long-run, economy-wide prosperity is due to technological advances, Bhidé says. In the case of most DRTV products, when one novelty dies, another shows up, but there’s no technological advancement.